Our Millennium: Political Science Confronts the Global Corporate Economy Author(s): Theodore J.

Lowi Source: International Political Science Review / Revue internationale de science politique, Vol. 22, No. 2 (Apr., 2001), pp. 131-150 Published by: Sage Publications, Ltd. Stable URL: http://www.jstor.org/stable/1601183 . Accessed: 08/01/2011 00:06
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Review(2001), Vol 22, No. 2, 131-150 International PoliticalScience

Our Millennium: Political Science Confronts the Global Corporate Economy

LOWI THEODOREJ.

ABSTRACT. all the freedoms for which the cold war was fought, free Of

enterprise was deemed sufficient for acquisition of all the other freedoms. The task of political science should now be to expose the loose and insecure moorings of economic ideology and to develop an approach more appropriate to the realities of our time. Our new millennium is a corporate millennium that has been interpreted in the hegemonic model to mean private and free (that is, unregulated) markets. However, any theory capable of incorporating the corporation has to be one of political economy. The first section of this article identifies six state-provided assumptions homoeconomicus to be able to has make prior to making or entering a market, without which homo economicusstays home. The second section puts the issue in a global context by identifying three developmental tracks-macro, meso, and micro. Their existence denies the possibility of a pure economic theory of globalization. The third section describes the distinctive politics of each of the three tracks, demonstrating still more conclusively that political economy is the only approach competent to deal with the new corporate millennium. In conclusion, the author argues that political economy is and should be the new political science that this new era requires. Global political science * Globalization * Market economy ? Keywords. Political economy

When the old Chinese prophet said "May you live in interesting times," he intended it as a curse. There is a curse hovering over political science, and it is the possibility of being excluded from the struggle to define precisely what is interesting in our millennium. All teachers and debaters know that whoever sets the terms of discourse will almost always determine the outcome. Naming the
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game is the name of the game, and admission to this contest is controlled by gatekeepers who see little if anything to be gained from recognizing political science as a major player. We must speak truth to power, but is power willing to listen? The cold war is over, and political science may have more to celebrate than any other discipline because the cold war was a war of ideas, in which the stated goals were freedom over slavery,democracy over dictatorship, and human rights for all human beings. These are politicalgoals, and the principal means for their pursuit were free speech, free elections, free inquiry, and free enterprise. Yet over the past two decades, political science has been losing the struggle for the definition of goals to a new hegemonic paradigm: an economic theory of democracy in which free enterprise alone is sufficient to accomplish all the other goals. This economic theory of democracy is not economic science, for which we have admiration bordering on adoration. The economic theory of democracy is not science but ideology, which we should fear. It gains its credibility from economic science and from anecdotal evidence about how capitalism vanquished authoritarianism, while ignoring contrary and unsupportive anecdotes. The point is that the free market does not make free all those who enter it, nor does it emerge or prosper without the substantial support of the state. Yet, for the past two decades, there has been a strong and dangerous tendency to denigrate the state-and therefore the political-as the primary source of irrationalityin the world. The economy is assumed to be a closed and self-generating, self-perfecting system which works through its own internal dynamics. As Wesley Mitchell put it eighty years ago, the recurrence of business cycles is a working out of an "inner mechanism" in which one phase of the cycle generates the next, with each period of the cycle containing the seeds that inevitably flower and produce the next phase. This is the moder transformation of Adam Smith's invisiblehand into a visiblehand-an empirical phenomenon with working parts. Closely connected to this self-regulating mechanism is the assumption of equilibrium, which is the springboard to a claim far larger than mere economic theory. Let me put this in the mouth of one of the world's most successful capitalists, George Soros: "The concept of equilibrium is very useful, but it can also be deceptive. It has the aura of something empirical. That is not the case. Equilibrium itself has rarely been observed in real life..." (Soros, 1998: 36). Soros refers to equilibrium as an aspect of "market fundamentalism [which] plays a crucial role in the global capitalist system [by providing] the ideology that not only motivates many of the most successful participants but also drives policy..." (ibid.: 128). On the springboard of equilibrium, supported by firm data about the behavior of particular markets under certain strict conditions, and supported further by impressive equations, economics made a gigantic leap of faith to incorporate not only economic thought but social and political thought. This is precisely why economic theory has to be appreciated as ideology. And this is where political science comes in. Political science is the discipline which studies most of the institutional phenomena that economics assumes away. It is through examination of these assumptions that we can gain the capacity to put economics in its place. And that should be our goal in this era of globalization: to advance an understanding of the institutions of government and the practices of politics that can actually improve the prospects for salvaging more democracy from the tyrant-whether that tyrant be repressive rule by malevolent political

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elites or repressive rule by mechanisms that recognize no law except the law of the market place. Character of Economic Globalization Linkage to the political in our millennium must begin with a close examination of the key concept, globalization.First of all, note that it is a tion word; tion is a suffix indicating a process of becoming. It is a matter of degree. Thus, although globalization is ordinarily thought of as "borderless trade," in the real world it is a moving target. Better still, several moving targets. For example, globalization can be operationally defined as a share of foreign capital in domestic investment; or it can be measured fairly precisely in terms of cross-border flows of investment in or proportion to GDP; cross-border flows of goods as a percentage of GDP; or crossborder flows of people as a percentage of the recipient population. And so on. This brief characterization alone produces some fairly powerful insights. First of all, it forces us to recognize that ours is not the first epoch of globalization. Ours is Globalization In;Globalization I extended roughly from 1880 to 1914. That great libertarian magazine The Economistis a good authority on the subject: "By most important measures the world was more closely integrated before 1914 than it is now-in some [respects] much more so" (Crook, 1997: 37). Having thus encountered Globalization I, what can it tell us about Globalization in? It helps at the outset to recognize that 1914 is the date of termination for Globalization I. Although this opens up all sorts of questions of cause and effect, pursuing those would only belabor the obvious, and worse, would amount to a diversion from a much more intriguing inquiry: within the 1914 context, globalization reveals itself as at least a three-dimensional phenomenon, each with its own developmental track. Track 1 is the macrolevel; track 2 is, for lack of a level. better term, the mesolevel; track 3 is the micro Track 1 The macro level is defined by those economic matters that are most globalizedthat is, closest to complete borderless trade. It is the financial markets-international financial or capital transactions. This level also most closely approximates to the pure market as a self-regulating system. Annual turnover in global capital exchanges rose from an estimated $188 billion in 1986 to $1.2 trillion in 1995, and is still rising (Eichengreen, 1997: 377-382; Hirst, 1997: 409-425). Cross-border capital transactions in the G7 countries rose tenfold in that period, but more striking is involvement of the developing world outside G7. The biggest capital importers between 1990 and 1995 were, in descending order, China, Mexico, Brazil, South Korea, Malaysia,Argentina, Thailand, and Indonesia, and significant major newcomers are Bolivia, Poland, Russia, India, and Vietnam. Although the macro economy gets about as close as possible to the ideal of the self-regulating market system, it is not without an institutional structure. The International Monetary Fund and the GATT(now wro) have been an effective framework. The IMFmanaged the system of fixed exchange from the end of World War ii until rates were set loose by President Nixon in the 1970s. The IMF continued to contribute to world economic stability as a lender of last resort while using its lending power to leverage countries into membership in the global capitalist club. The IMFwith the World Bank aided recovery of war-torn countries

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and then helped bring along newly developing countries. The IMF, World Bank, and GATT have also helped prevent the world from fragmenting into hostile (WTO) trading blocs euphemistically called free trade associations while at the same time leveraging the less developed and former Soviet satellite countries into domestic practices meriting membership in the global economy. Thus, the expansion of the genuinely macro market system was neither entirely economic nor spontaneous. This is politicaleconomy (Judis, 2000: 14-15). Track2 The meso level is the level of the major players, the key traders and dealers in the global economy. And already very early in Globalization I, they were not what they had been historically. Homo economicus originally the rational actor, a human was units of work and wealth to enhance satisfaction by making exchanges being using with others. The main actor then became the firm, and the simple firm gave wayor was completely overshadowed-by the incorporated firm. The corporation became the key player,first because markets are not simple acts or single decisions but are repetitive behaviors, and the corporation-being an eternal person-is the only engine that can sustain the market as a process. In the second place, the corporate form dominated because it was capable of vertical integration, capital concentration, and market organization and management on a scale that can make an international, global economy and then meet its demands. As Chandler put it, corporations were uniquely able "to internalize several processes of production and distribution and the market transactions between them within a single enterprise. Such internalization permitted the visiblehand of administrative coordination to make more intensive use of the resources invested in these processes of production and distribution than could the invisiblehand of market coordination" (Chandler, 1997: 364, emphasis added).1 According to Chandler, most American industries had acquired their moder structure by the end of World War I, and this structure has remained the same ever since (ibid.). However, what Chandler does not say is that these corporations, including those that came to be called multinational corporations (MNCs), were then and are now far more dependent on state-provided frameworks than any previous form of enterprise. The following are a few telling examples. Space permits only a skeletal treatment, but it should be patently obvious to any serious observer how important each of these is to the life of the corporation. What I am calling frameworks, sociologists would call "functional prerequisites." The six identified here do not pretend to exhaust the possibilities. Provisionsfor Law and Order.Predictability in human affairs obviously precedes everything else. But the social order is more than the order imposed by military means, important as that is. The market requires what Max Weber called "calculable law" (Weber, 1981: 277). Provisions Property. for Property is a legal fiction. It is a synthesis word for all the laws against trespass. Through this process, law renders highly probable that we can enjoy real dominion over that which we claim as our own. "The market"can come only after that. Provisions Contract It for Enforcement. is impossible to imagine transactions today without contracts, and it is also impossible to imagine contracts without virtually

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absolute assurance that some source of authority outsidethe market and priorto the market will make breaches of contract more expensive than observance. Provisionsfor Exchange. There are still other matters that lie behind contract, making contract itself possible. In brief, there has to be standardizationof the language by which contracts are written. Standardization is of two kinds: the legal language and the specific technical or substantive language; both precede the contract and thus precede the market. Provisions Public Goods.Time and technology can transform an existing public for good into a normal marketable commodity. But in any epoch there will be some functions that individual market players cannot provide for themselves without providing them free for others. There is, according to Hume (through Olson) an inherent disincentive for one or more neighbors to empty the nearby swamp when they are aware that "free riders" can enjoy the result. And there is an inherent disincentive for a Microsoft to teach all of its employees to read, write and calculate and then see them go, free of charge, to other employers. Provisionsfor Allocation of Responsibility Injury. No sane person would enter a for market conscientiously if all responsibility for their initiative were personal and if there were no limit to that responsibility as their products or services pass through the economy. Tort law is one of the dominant examples in most capitalist environments. Another example is the corporation itself. One of the most valuable incentives for organizing economic activity in a corporation is that the liability of the owners is normally limited to their share of the ownership of the corporation. The first conclusion to be drawn from these framework provisions is that in the real world of economic players there is no such thing as an economy. There is only political economy. Second, all the functional prerequisites of the market economy are met entirely or in largest part by deliberate, institutionalized governmental activity-laws, public policies, programs, statutes, and other official instruments. Some laws or policies have been in operation for so long that they are no longer recognized as deliberate contrivances developed by courts or adopted by legislatures or heads of state and their councils. A third conclusion will be applied first only to the United States, but it leads to a larger conclusion applying to "the state" anywhere. Since the us Constitution relegated to the state governments virtually all the authority to pass the laws that meet the prerequisites of the market economy, the absence of national provisions made it possible for Americans to believe they had once enjoyed free, laissez-faire enterprise which was eventually corrupted by government interference. The states continue to provide virtually all the legal support systems of American capitalism, despite the constitutional revolution of the 1930s. Even in countries with classical European-type states, a similar legal support structure is provided. In other words, all corporations, regardless of their size or their multinational character, have their legal feet on the ground in some particular locality and are supported by public policies there. Track 3 The micro level is the dimension of community and local institutions. One reason why a causal analysis of 1914 is so tempting is because economic expansion acts on

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this micro level and produces antagonistic reactions as well as the supportive legal arrangements outlined above. The Europe of 1914 called it Balkanization because that is where local reaction was intense enough to provide the spark that lit the August fire. Balkanization became a generic term applying to any efforts at tribal, ethnic, communal, linguistic, racial, or other bases of self-determination. Balkanization also implied war, given the tendency of one tribe or ethnic or other population group to perceive as threatening the self-determination efforts of others of its neighbors. Globalization has played a major hand in this Balkanization process because capitalism was the most revolutionary force in the previous millennium and promises to be the same in this one. Capitalism must be credited with (or blamed for) the transformation of the peasantry and the making of the working class, the creation of labor as a commodity, the conversion of all property into liquid/commodity form, the commercialization of agriculture, and so on. From the standpoint of local elites, traditional leaders, and established powers, capitalism and industrialization had to be seen as hostile because they were destabilizing-agents of change coming in from the outside. Robert Reich put it rather neatly in his foreword to the mass-circulation World Almanacand BookofFacts2000. ahead (such as globalwarming, excessive Beyondthe obvious,specifichazards populationgrowth,and nuclear proliferation),a more universaldramawill play itself out in the coming century.Twogreat,opposingforces are likelyto grow stronger,and the contest betweenthem maywell determinethe fate of The humankind. firstforce is technology. The secondis tribalism (Reich,1999: 33). But there is a great deal missing from this picture. First, he speaks of this antinomy between technology and tribalism as a force shaping the future when in fact it was already a force shaping the past and the present. Second, although capitalist expansion is and will be seen as hostile to local traditions and elites and power structures, Track 3 (the micro level) is absolutely essential to capitalism, for, no matter how big corporations get and no matter how far-flung and multinational they spread, all corporations have their legal feet on somebody's ground, and they will daily, weekly, and annually need legal life supports; that is why these are called functional prerequisites. Whether the local arrangements are adopted by national governments (European style) or primarily by state governments (American federal style), implementation is ultimately local or localized. An old American political sage once observed that "all politics is local." He failed to add the explanation, "because all social control is local." Still another factor is missing in Reich"s picture, but is implied by his use of tribalism to epitomize local and community bonding: this is that micro-level governments are inherently conservative. But this will have to wait until the politics of Track 3 in the next section. Toward a Politics of Globalization Disaggregation of globalization into separate dimensions or tracks has opened the economic definition of reality to question-or I should say, to political questions that might indeed produce a whole new discourse. It turned out to be impossible to deal with any of the levels or trackswithout recognizing the deep and systematic

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involvement of the state: legal arrangements that use authority-legitimized coercion-to serve, to support, and to regulate conduct in a way that provides the structure within which economic processes work. To repeat an earlier contention, political science as a profession is capable of confronting virtually all the factors that economics assumes or assumes away. Political analysis extends beyond the structure, moreover, to ideology and ethics: beliefs and arguments based on beliefs that justify given sets of arrangements and existing structures of power. It is time to go back over each track and to highlight its political character: What are the goals at issue? Who plays?Who gets what? And why? That of course is an ideal agenda. No claim will be made thatjustice is done to each question. The Politics of Track 1 It is not difficult to identify two primary goals that are at issue in the macro dimension: (1) constitutional transformation, and (2) redistribution of social obligations or, more accurately for our time, reredistribution. The first goal, constitutional transformation, may sound dry and academic, but nothing is further from the truth. Globalization and its discourse seek a drastic restructuring of government and government authority, thereby raising the threshold of membership in the global economy club. Specific policy demands for constitutional restructuring have become dry by repetition: decentralization, deconcentration, devolution, deregulation. The alliteration is not accidental or contrived. As tion is a key suffix indicating a process of becoming, de is a key prefix indicating downward, away from, toward the bottom, reversing, undoing, exhausting. When you get down to the specifics of policy at the macro level, the patent purpose is the same as that of Adam Smith: to deprive states of the authority to adopt any restraints against free trade. This is the constitutional transformation the macro economic paradigm supports, on the assumption that without stateerected barriers, the laissez-faire economy would grow and prosper. But if free trade were the only goal, the policy would be the easiest thing in the world to draft and implement: "establishing free trade...could have been written on one page-a simple treaty to eliminate tariffs." In actuality, free trade treaties involve hundreds of pages of effort to impose obligations on member states to weaken or eliminate the social obligations and entitlements that were established and expanded during the pre-globalization, postwar, social democratic years. Those obligations and entitlements have been redefined as "mercantilistic" interference with capital flow (Faux, 2000: 14). These are the re-redistributive policies at the macro level. In examining the political process of establishing and reaching goals at the macro level, it is notable that the most prominent players in the politics of constitutional and re-redistributive policies are not the corporate elites and their interest groups but major economic theorists in universities and think tanks and high-ranking experts and technocrats occupying command posts in a few central state banks and a few international agencies, such as the IMF,World Bank, ITC, and
WTO,and such regional agencies as EU and NAFTA.And so on. MNCs may have most

to gain or lose, but neither their voices nor their clout has been prominent in the public discourse at the macro level. PeterJohnson reports on the basis of his booklength study of the us Federal Reserve and the Deutsche Bundesbank during the 1970s and 1980s that the curtain on Globalization II at the macro level was raised

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by the victory of the Friedmanites over the Keynesians-the "fresh water economists" over the "salt water economists." Once the ideological/theoretical debate was won, the new international monetary policy and monetary structure virtuallyfell into place (Johnson, 1998: chap. 1). Johnson goes on to observe that monetary policy is so comprehensive and immediate in its impact that policy makers at the macro level "must attempt to limit or exclude such claims [of losers and winners].... [T] his has increasingly fostered the subordination normalpatterns of of political representation (party politics, interest groups, etc.)...by recruiting economic expertise and incorporating it into the policymaking process"(ibid.: 6, emphasis added). Macro level politics is distinctly un-pluralistic. There is an analog, which may be a companion and could possibly be the most concrete rendering of the politics of the entire macro domain: the government of the Internet. It consists of four (so far) institutions, specialized around certain tasks. World Wide Web Consortium (w3c) is the main Internet standards (or standardization) body. The Internet Engineer Task Force (IEFT) develops consensual tech standards and has its own steering group (IESG) to coordinate them. The Internet Corporation for Assigned Names & Numbers (ICANN) oversees domain names such as .com and .org. All these bodies were spontaneously created, are self-governing, and are open to any and all as members. There is deliberation within each, but "Wereject kings, presidents and voting." Consensus is the rule. However, the individuals most widely respected for their expertise are accepted as "benevolent dictators" to create a consensus. They sit atop a "meritocratic online 'community'," comprising thousands of volunteers, "likeminded individuals" (The Economist, 2000: 73-79). This meritocratic, technocratic paradise is no myth. It is a realityjust one step beyond the less pure technocracy we can already see and appreciate in the politics of the macro-level, especially of the structure of world capital transfers. Ideology (or theory) has also been the key attribute of the macro politics of reredistributive policies, whose goal is "to shred the social contract" (Faux, 2000: 14). It is amazing how parties of the left-all over Europe, from social democratic to labour to socialist and even former communist-have so readily swallowed the theory that "global free trade would eventually make everyone better off, even if some people would suffer in the short term" (Friedman, 2000a: 13, A23).2 Stigmatization of government is itself a major policy-as an ideological policy or a propaganda policy-to help guarantee that future leftist party governments won't dare try to re-regulate, re-centralize, or redistribute. "Government"has become the socialism against which we fought the cold war. If Ronald Reagan had been running for office in 1920 instead of 1980, he could have been imprisoned along with Sacco and Vanzetti for his criminally anarchic proclamation that "Government is not the solution; it is the problem." Only time will tell if stigmatization went too far to be moderated. But we will never get nearer to an answer if we permit no discourse that can raise the question and keep raising it. The Politics of Track2 Meso politics is quite another matter. The goals at issue are different. The players are different. The "powerstructure"is different. The discourse itself is significantly different. Yet it is all part of the global phenomenon, giving rise to the question of how economic thinking can live with globalization as a unitary concept, without

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ever attempting to unpack it. Virtually all the meso politics is masked by the aggregate data on the macro "global market." The goals sought by the players at the meso level are to a large extent coextensive with the list of "functional prerequisites" given above, because however old and established many of the fundamental pro-market policies are, they are constantly in need of revision and amendment, especially when the pace of economic expansion or contraction is intense. Some of the newer policy issues arise out of technological innovation, generally called intellectual property rights. And the Microsoft case is only the tip of the iceberg of new issues in what had been treated as settled categories of policy, such as merger and strategic alliances, pricing and marketing agreements, revision of labor laws and civil rights laws, environmental protection standards, and so on. Each nation-state must make laws in these areas to meet their own needs, yet international standardization is more pressing than ever. Even more interesting at the meso level of politics are the regional free trade associations, which have to make policy decisions for their own members. The two most important so far are the EU and NAFTA but there are already three more fledgling regional associations (Mercosur, Apec, and Asean), with more surely to come in the near future. These regional associations, like traditional nation-states, are "free trade" only among their member units but not with regard to nonmembers. To put it crassly,the regional associations by nature discriminate against non-members. Since the EU is the most advanced and already has a fairly stable political process, it is worth a closer look. And it only takes a brief encounter with the EU to see that its political process is as pluralistic as the macro political process was seen to be elitist, hierarchical, and technocratic. The leading students of the politics within the EU, Wolfgang Streeck and Philippe Schmitter, are, after a decade of close study, unable to decide whether "Europe's would-be polity" is a classic American-style pluralistic system or a version of the older European corporatism variant of pluralism. But they are confident in their treatment of that political process as one dominated by interest-group formation engaged in a bargaining process driven by "professional leaders of organized interest groups" (Streeck and Schmitter, 1991: 133).3 These organized interest groups include some MNCS themselves as well as trade associations which represent corporate members. Unions and professional associations are included, but they are far outnumbered by associations of business interests. In the formal EU policy processes, functional representation competes with parliamentary representation; and, with the encouragement of the formal EU governing bodies, the number of interest groups represented on advisory committees, expert groups, and consultative bodies has mushroomed (ibid.: 133-164; Mazey and Richardson, 1993: chap. 13; Richardson, 1996: esp. chaps. 1, 11). Regional associations, like nation-states, are very much a part of globalization, but they are amply capable of resistance to the macro economy. Cross-border exchanges between and among their members do contribute to the aggregate level of globalization, but that should not be allowed to mask the potential for conflict, indeed violent conflict. Regional associations, like traditional nationstates, moder multinational corporations, and old-fashioned cartels are all groups composed of memberships willing to give up a certain amount of sovereignty and freedom of action in return for lower risk, higher short-term profit, or both.

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OPEC, a cartel that combines common interests of several regions, is a dramatic case in point. Another case is a large nation-state like China, which is proving without having officially given an inch on human capable of forcing itself into wrTO rights or environmental standards. Emerging regional associations will soon discover (just as sub-national regional associations discover when confronting their national government's policies) that there are certain goals so fundamentally shared by employer and worker and rich and poor within the region that they can pursue their goals together despite global competition, wro, and even IMF pressures. And finally, as a consequence of the dramatic merger movement, MNCS in the industrialized nations have internalized so much of what used to be regulated and coordinated by classic market mechanisms that they are the functional equivalent of dozens of new regional free trade associations or cartels. Thomas Friedman and other true believers in the free trade religion may sincerely embrace in their catechism that no two capitalist countries or no two countries with McDonald franchises will ever go to war with each other. But economically driven violent conflicts over wage slavery, spillover pollution, or illegal immigration are forms of "competition" that neither scientific economic theory nor free market ideology should claim it can handle. If Globalization I has any relevance at all, there are Globalization ii developments whose consequences are worth watching closely. And they are developments which defy systematic, quantitative economic science (Keller and Pauly, 1997: 370-376).4 In fact, a lot of those quantifiable data cry out for a more disaggregated, less macroeconomic conceptualization. A recent report by one of the world's leading students of the relation between international trade and international development, Jeffrey Sachs, demonstrates that the providers of nearly all of the world's technological innovation, the "high-tech innovators," are distributed in just four regions-North America, Western Europe, Japan/Korea, and Australia. "Technological adopters" comprise only five more regionsMexico, the Argentina/Chile half of South America, the European periphery, the South- and East-Asianperiphery, and South Africa. All the other regions comprise the "technologically excluded" (Sachs, 2000: 81-83).5 We need not specify just how fundamentally different are the interests of each of these technologically defined regions.

The Politics of Track3 The micro level is the local but might more meaningfully be called the parochial level-that is, parochial meaning local and "of the parish."This is indicative of the great distance between the character of the politics of Track3 and the character of politics of Track 1 and Track 2. The earlier proposition, that micro level governments are inherently conservative, serves well as an entree into the special character of Track 3 politics. By conservative I mean genuinely conservative. Classical or laissez-faire, "neoliberal" ideology became defined as right of center because the litmus test of left vs. right in Europe is the attitude toward capitalism. But while that is not without validity as an indication of "right of center," conservatism is a poor and misleading label for it. Conservatism should be, and will here be, limited to what now has to be referred to as "social conservatism." Genuine conservatism takes a moral position toward individual conduct and social and community ties. A genuinely conservative policy would be oriented toward conduct "deemed good or evil in

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itself'; that is, conduct is consonant with some moral code or it is not. Research beyond reading relevant sacred sources is unnecessary; it is not difficult to know what is permitted or forbidden. In contrast, all forms of liberalism, including neoliberalism, are purely instrumental. Liberalism addresses conduct deemed "harmful in its consequences." Societies and communities are not moral entities or the source of virtue but are, to liberals, human contrivances subject to deliberate as well as spontaneous change. Research into causes and consequences is essential to liberal policy-making. A false impression has prevailed for a long time in the United States and elsewhere that cities are the liberal, leftward, indeed revolutionary, components of a society. While there may be some truth to that in the cultural and aesthetic realms, such urbane values rarely prevail in local governance. By local I mean both state and local government (in federal) and regional and local (in unitary) systems. Local governments are particularly conservative in the United States because they are not only responsible for adapting and implementing the policies passed by state legislatures to regulate "the health, safety and morals of the community" (the very definition of "police power" in English constitutional history). That builtin conservativism is reinforced by the local tax base, which is primarily the property tax. But regardless of country and regardless of the pluralist or elitist power distribution in cities, and regardless of how dynamic is their posture toward culture or economic development, all localities are strictly observant about their obligation to social order. It is indeed true that federalism and other genuine devolutions of power to lower levels of government permit variation in policy from one principality to another. For example, in the United States, capital punishment is provided by law in 37 states and not provided at all in the other 13 states. Punishment for possession of drugs varies from slight to draconian. Contemporary social policies can also vary from quite left-leaning generosity to highly conservative paternalistic assistance that is coupled with severe restraints on eligibility and obedience. But much of this is transitory and a great deal of it is illusory. From the nineteenth century literally until the 1960s, charitable assistance by local governments in the United States was severely conservative. In nineteenth-century United States there was a great deal of private charitable assistance and at least some signs of expanding public assistance for the elderly and the dependent. But the assistance was very closely tied to police functions, stressing research into whether applicants were deserving or undeserving. And, in direct violation of the First Amendment, even when local services were relatively generous, they were to a very large extent a cooperative venture between the local government and a church-based charitable organization heavily financed by the local government. One of the largest items in the New York City budgets in the early 1900s was "grants to eleemosynary institutions." The generosity and services we associate with local governments throughout the industrialized countries is largely a product or an artifact of the social democratic post-World War IIepoch, and even then there was a great deal more surveillance and moral regulation by local social service workers over their clientele than is generally understood. And in the 1990s globalization cycle, surveillance and regulation intensified. Again taking the lead, the United States in 1996 abolished public assistance as an "entitlement" and virtually converted local social welfare workers into a welfare police (see, especially, Mink, 1998). Social order means keeping classes, races, ethnic groups, genders, and life-style groups in

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their places. Keeping people in their places is mainly achieved by segregation, which usually is given the more respectable name of community. Communities in the United States are often given special racial and ethnic designations-Chinatown, Little Italy,Jewtown, Harlem (which in New York City had been a Jewish quarter before it became black); and Hoovertown and Shanty Town for the recently impoverished. Although in the United States "ghetto" was adapted for use in designating all distinct forms of segregation, the term was of course brought over from European usage as a designation for separate Jewish communities. But it would be quite wrong to imagine that Jews were the only population grouping in non-us cities subjected to local social policies of segregation. Two thousand years ago a Chinese philosopher advised his lord that "the scholarofficial, the peasant, the craftsman and the merchant...should not mix with one another, for it would inevitably lead to conflict and divergence of opinions and thus complicate things unnecessarily...." This was echoed in 1910 by a Viennese architect who wrote, 'We may consider it axiomatic that the administration of a great city...demands its division into wards [which] form the foundation of the systematized regulation of the great city" (Kostof, 1992: 102-103).6 This social regulatory attitude is so deep in the history and values of cities that it is even expressed in their architecture. Next to defense, it is what city planning was all about. Pre-nineteenth-century Paris was a city of quartiers,neighborhoods segregated along class, occupational, and cultural lines. Haussmann's nineteenthand century Paris, although known for its grandsboulevards magnificent vistas, was to segregate and resegregate the city distinctly along class, occupational, designed and cultural lines. The boulevards also served to prevent "dangerous classes" (including students in 1968) from erecting barricades to prevent the passage of troops. Greve,the French word for strike, had its origin in a little piece of geography in front of what became the Hotel de Ville where barges on the Seine were loaded and unloaded. As workers, who lived near where they worked in "a vile neighborhood" (Jordan, 1995: 105), began to agitate by demonstrating in the Place de Greve, Haussmann moved them out of the central city into working class suburbs. Signs of the conservatism of cities are not limited to architectural design and city planning. Braudel reports that Marseilles in the sixteenth century not only restricted citizenship but had a requirement that a period of ten years of domicile was necessary to possess property or to marry a local resident. "This limited conception of citizenship was the general rule everywhere" (Braudel, 1981: 518). City governments cooperated with the major craft guilds to control work opportunities in cities, including opportunities to start new businesses or create new trades (ibid.). And the great guild halls shared the central city squares and plazas with two other corporate sources of authority-the government and the church (Kostof, 1992: 124).7 Modern cities are not appreciably different. In the United States, the misleading impression about the leftward egalitarian progressivism of urban centers was strengthened during the 1950s-1970s epoch of federal urban policies. Generous grants-in-aidfrom the national government loosened the ties of cities to their property tax base and imposed an obligation on the cities to use the federal money in a more redistributive way. But the precise implementation of these national urban programs was devolved to the discretion of the city governments,

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and as a consequence, American cities were more segregated after the urban policy revolution than before. Meanwhile, Gaullist France adopted a similar devolution policy in the 1970s, and this was embraced and strengthened by the socialist government elected in 1981. The Mitterrand government, calling it "functional decentralization," adopted an important decentralization law in 1982 and another in 1987, establishing a new system of regional government, authorizing them to use a maximum of discretion. The stated purpose of these laws was "to reduce the scope of national tutelld' (Safran, 1991: 217). In order to emphasize this decentralization, the Mitterrand government actually abolished the revered office of prefect. Five years later, in 1987, as the socialist government was adjusting to globalization, the office of prefect was restored, but the devolution of discretion down to departmental and local levels was not reversed. This was the bellwether of the rightward movement of socialist governments throughout Europe (ibid.: 217-218, 236). National governments had become untouchable. Stigmatization took on many forms; but classical economic theory's attack on national government and its policies as socialist interference was the leading strategy. Political corruption was another. Political corruption is a given, even in stable democracies, it, along with taxes, is "the price we pay for civilization." This is not to condone it but only to say, "Whynow?"Why are so many politicians, especially so many high-ranking and well respected members of the political class being discredited now? Why so much political turnover by means other than election (Ginsberg and Shefter, 1999). It has to be considered part of the campaign to discredit democratic politics, indeed part of the still larger strategy of stigmatizing democratic government. And it served a dual purpose. First to delegitimize national government, because, as earlier observed, that helps guarantee no electoral politician would dare propose new national policies of trade regulation (any other interference). Since parties of the left tend to favor nationalization of authority precisely because that's the only way to establish common standards of human rights-mainly through redistributive policies-any embrace of devolution is a large rightward step. All that talk about local government being "closer to the people" is household noise. But it's popular noise, so popular that it was music to Clinton's New Democrats, Blair's Third Way, and to all their epigones among parties of the left and centerleft all over Europe. This was the answer, as manna from heaven, to the question of how to go right and stay left: give power to the people while easing the burden imposed on trade by the entitlements and safety nets established by left-leaning national governments between the 1930s and the 1970s. The key here is to recognize that globalization, whatever its benefits, is deeply problematic. Economics may drive and guide globalization; it is left to politics to confront the problems and pick up the pieces. And what are the pieces? In brief, they are virtually all the things that rational choosers do not include in their rational choice, cost-benefit calculations. Conclusions, Reflections, Toward a Global Political Science I will conclude with a few observations that are not systematically linked but are all aimed at establishing some kind of linkage toward the political and away from the Proposals

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economic. The first is the most general proposition. The other propositions can be thought of as subsidiary to it. The most compelling conclusion arising out of this effort has already been articulated, and, to the best of my ability, established: there is no such thing as an economy; there is only political economy. The rest of this article is a lawyerlybrief in its favor. Another general conclusion of value to the purpose here is that a state that can make markets can unmake them. This is a superior cousin to Marx's thesis that capitalism is a system imposed through the state by ruling interests. The truth as I see it here is that, quite beyond Marx, capitalism did not need to be imposed, only facilitated. And not all state actions are facilitative. That"s the story of political economy, and the opening to the agenda of a global political science. To tease out this agenda for a global political science, I have chosen three problems of political significance that have been moved from fundamental to critical by global economic expansion: citizenship, wealth, and environmental externalities. But this is not exactly a research agenda, although more research is always better. It is my contention that political science does not need more research before we confront economic theory with a competitive discourse. All we need to do is to apply more passionately what we already know. Vigorous engagement in the discourse will in fact be the best way to find out just what research we really need. And in the process, we can expose the economist as that wily Wizard of Oz. Citizenship A political perspective requires that citizenship be unpacked into at least two dimensions. First, there is corporate citizenship, for, after all, corporations are legal persons. Then there is the normally understood individual or human citizenship. At the corporate level, a highly competitive market is the enemy of good citizenship. This is simply another way of saying that one of the greatest virtues of a laissez-fairesystem is also one of its greatest problems. As competition spreads and intensifies, prices are reduced toward marginal cost. If that is so, and there is no reason to believe it isn't, then no individual competitors can be virtuous citizens and choose to raise wages or to improve the work environment or recycle waste products, because the added cost would force them out of the market. Citizenship-both corporate and individual-means membership in the city, in the polity. Citizenship means, above everything else, having a few rights in regard to matters essential to personal integrity, collective security, and public order. Citizenship is defined by rights, not obligations; obligations can only be imposed by specific laws, usually called "the rule of law."Rights are claims to a remedy of so high an order of need that the remedy can be denied only by an extraordinary authority, plus an extraordinary decision process specified in advance. The authority sufficient to dispose of rights is usually lodged in something we have come to call a state, and that state must have a credible theory of itself, not an abstract philosophy of right but a specification of rights and a decision process for disposition of rights claims beyond the convenience of the participants. That is the essence of a constitution, but this in turn points to a fact difficult to dispense with-that rights are inconceivable without a state or some "moral equivalent of a state." Leaving the market alone (laissez-faire) to perfect its own

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solutions to claims of right, as part of the self-perfecting mechanisms of an economic system, would amount to allowing each corporation to be a judge in its own cause. And that is where corporate citizenship ends. Either the corporation is a citizen with rights claims on the state orit is its own state-a state within a state or a state without a state-with authority to dispose of rights claims made on it by its human members. But of course, no corporation known to us as yet has a theory of itself, especially one that defines its members, their rights, and the process by which those rights can be satisfied or denied. The corporation in economic theory is a mere behavioral unit. Where, except for political theory, will this other corporation come from? In this context, "globalization" today is nothing more than a new feudalism, an escape from citizenship into labor and consumer serfdom, depending upon the good will of the corporate lord. Some political scientists are beginning to recognize this kind of tendency in the globalizing context, but are trying to help the economists out by formulating hopeful but quite illusory communitarian and voluntaristic arrangements, such as "participatory governance," as though citizenship and rights can be handled on an entirely voluntaristic basis within the spontaneous-or apparently spontaneous-corporate market place (Schmitter, 2000). But if political science has any integrity at all, it seems to me that its discourse must recognize and must emphasize to the top of our voices that a voluntarism that depends upon consensus leading to the involvement of umpires to implement whatever consensus has determined is either phony or is preliminary to reinventing the state. From the standpoint of rights alone, can the state be allowed to wither? Wealth Globalization produces competition, and competition produces wealth. Who would be foolish enough today to question that? But the problematic worthy of discourse begins with the recognition that wealth also seems to produce poverty. Or, to follow one of the very few great American political economists, Henry George, there is a direct relationship between progress and poverty. George recognized this very early in Globalization I and he tried his best to emphasize the urgent political consequences of this relationship: "This association of poverty with progress is the great enigma of our times... [and the] reaction must come....To educate men who must be condemned to poverty, is but to make them restive; to base on a state of most glaring social inequality political institutions under which men are theoretically equal, is to stand a pyramid on its apex" (George, 1948: 10). But just when does the level of unequal distribution become a public wrong? When do meso and micro politics begin to generate social movements? And when does redistributive state policy become justifiable? One of the leading members of the laissez-faire college of cardinals, the editorial board of TheEconomist, would offer us the following solution: "Aslong as the boom continues, most Americans can subsume their envy in the thought that they themselves are better off' (The Economist,1999: 31). The thought back of this is not limited to Americans. Thus, in any expanding country, progress and poverty can live together in equilibrium as long as there is enough hope and faith among those less well off to "subsume their envy." This is an economic theory of psychology at its most absurd. I will give that problem to the psychologists and will concentrate on how we can

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take wealth inequality awayfrom economists with a credible politics of economics. Policy analysis will have to be nudged away from costs and benefits to a new jurisprudence, with categories of rights and policies that confront differences of culture, tradition, and status. For example, why are there no developed approaches to the market value of home care and mother work?Why is poverty so highly and increasingly feminized? More generally, why does the market tend to denigrate the value of jobs traditionally dominated by females and lower-status ethnic and racial groups? At what points and with what status groupings does support for existing political processes begin to break down? These are political questions, and they point, among other things, to new uses of sample surveys. Methods might remain the same but hypotheses would be tested in groupings or categories, cumulatively around fundamental values in different culture contexts, rather than one micro-hypothesis at a time. Comparative, global behavioral research around political values, needs less stress on causal analysis and more stress on consequential analysis. One outstanding example would be the work of Hans-Dieter Klingemann and associates on the consequences of political reforms in European postcommunist countries, coupled with the fact that the political reforms preceded the economic reforms (Klingemann and Hofferbert, 2000). A second example would be Seymour Martin Lipset and William Schneider's, The Confidence Gap (1987), especially if it became the model for comparing questions of legitimacy in all the democratizing countries. There is still another aspect of wealth distribution, the widening gap between rich and poor nations. But this can best be dealt with in the context of the third agenda item: environmental externalities. Environmental Externalities Unregulated markets in natural resources and production based upon the untamed exploitation of degradable natural resources wiped out forests, rain forests, wetlands, grasslands,water tables, and the atmosphere in vast areas of what became the developed capitalist countries. As long as the entrepreneur could disregard the spillover effects and could move on to new territory when the resources were exhausted, the savings were passed on to consumers and offered as evidence of the benefits of competition. The true cost of production has never figured in the free market, and, ceterisparibus (to use a favorite laissez-faire expression), the true cost of production will never be figured in. But now that the window of externaliation is closing, late-comers to industrialization want to keep the window open, to use the same methods as their predecessors. Other things are not going to be equal. Regulation seems inevitable. Environmental pollution and the use of nonrenewable resources are like any public goods: there is a disincentive among all players (especially if they are competitors in a competitive market) to do the right thing because others could share in their contribution without paying, and worse, the added cost of doing the right thing-whether it is cleaning exhaust gases or paying above subsistence wages-would force the good guys out of the market. Regulation imposing a higher standard on all the players makes all the players good citizens and improves the public space by raising the field of competition while keeping it level. Unfortunately, however, regulation is an inherently limited approach. Even on a national scale, regulatory policies are the most difficult ones on which to gain

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majority support, not to speak of consensus. It can only be more difficult on an international scale, because even if adopted by all the major governments, and WTO or some other international body were given impressive resources to implement them, regulatory policies would still be especially difficult to implement internationally for at least two very concrete reasons: internalization and blackmail. First, the big multinational corporations can hide the conduct to be regulated by internalizing their transactions through mergers. It seems ironic but it is true that regulations that seek to limit the freedom of corporations to externalize their costs can be foiled by internalizing their transactions in dealing with their own subsidiaries. Capitalism preaches transparency; corporate mergers produce the opposite. The second method is blackmail-the threat to export companies, jobs, and capital to a more hospitable country. There will always be rogue countries that will not or cannot restrain exploitation of their nonrenewable resources, which are then usable on a scale that the world can no longer tolerate. A second policy alternative is in many respects the reverse of regulation-a multinational system of purchasing environmental restraint. This could also become a key method of world redistribution of wealth. All poor countries have one thing in common: they are poor in capital, but they are very rich in something that all the other countries value enormously-they are rich in natural resources or in already polluted but localized resources (such as piles of radioactive materials) which if, through untamed use, they are unleashed upon the world would be crippling even to the richest of countries and peoples. Elsewhere associates of mine and I refer to this as "negative capital": Negative capital exists everywhere.It can be defined as situations,events, or environmentalconditionswhich have externalitiesthat degradeor threatento degrade the standardof living or life expectancyof great numbersof persons, including those living in wealthynations. It is capitalbecause its presence, or more preciselythe mitigationor eliminationof it, is potentiallyof greatvalue to the rich (Keller, Lowi,and Gendlin,2000:76). Negative capital has not as yet been monetized or commoditized, but it can be and will be because it is as integral to the market as any other form of capital. Now some will call this another form of blackmail, where owners of degradable or dangerous resources threaten to harm all others by abusing or unleashing it, unless they are paid some kind of tribute. But this entire matter can be quickly redefined and made quite manageable as negative capital, because it has value and that value can be enhanced by its non-utilization. This in fact can be compared to Abraham Lincoln's first approach to emancipation, nearly a year before the Emancipation Proclamation. Lincoln's proposal was not for freeing the slaves unconditionally but was for "compensated emancipation," whereby each and every slave would be purchased at a fair price from the owner, just as any private property would be purchased, through a process akin to normal eminentdomain whereby any property can be acquired for a public purpose if properly compensated. The vast, remaining non-renewable natural resources of the earth and the substantial radioactive resources still sitting as time bombs in various countries have to be treated as capital, and the wealthy industrial countries are going to have to pay dearly for the acquisition of that capital in whatever form. This will require policies that are innately redistributive. Taxation will be required. Already in the

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public domain are proposals for millage taxes on international transactions. As small a tax as one-tenth of one percent could be imposed on every dollar transferred between international banks (ibid., 2000: 22). E-commerce is going to be taxed eventually. And all of the richer countries could then also provide from their own internal revenue sources additional funds to be made available for investment in negative capital. This could be done by the same means employed by the Marshall Plan, whereby accounts were opened at major private banks to be drawn upon by qualified owners and sellers of negative capital. Standards could be attached to the sale, indicating that the capital transferred, by gift or loan, has been put to use in productive (and sustainable and non-polluting) ways. The actual carrying out of these plans could be monitored by the banks themselves, whose officers would have a stake in the honest fulfillment of these contracts. Moreover, by putting this on an open, transparent, and honest basis, the probability of bribery and corruption would be greatly reduced, if not eliminated. It is not enough to confront individual and world inequalities (including the lines like how those who are less inequality of the public's health) with throw-away well-off can "subsume their envy" in hopes that economic expansion will make them better off. That is very flimsy political mooring for the gigantic, selfregulating, self-perfecting economic system. It is also insincere, since envy is an aspect of greed, and greed is absolutely essential in the profit-seeking that makes the rest of the economic wheels go round. Permit me to conclude with the language of business: the bottom line. An international political science ought to be a science of political economy, and this should be the grounds on which we confront economics in a genuine competition. This puts us almost where the political sciences and economics were exactly a century ago, just before they split into two separate disciplines. Neither would have to abandon current objectives or methods of research. Both, however, would have to reinvent their terms of discourse, because this is a new world. And on that point, Alexis de Tocqueville (1945: 7) had the right question and the right answer. His question: Can it be believed that the democracy which has overthrown the feudal system and vanquished kings will retreat before tradesmen and capitalists? His answer: A new science of politics is needed for a new world. Notes of book emphasizes furtherthe capacity still 1. An earlierpassagein Chandler's important the corporation to displace market mechanisms by internalization:"The first propositionis that moder multiunit business enterprisereplaced small traditional when administrative coordination lowercost, permittedgreaterproductivity, enterprise
mechanisms" and higher profits than coordination market (Chandler, 1997: 6, emphasis by

added). no a 2. Friedman, relationto Milton,is generally left-leaning columnist,but on the macro of economyhe is a gauleiter free trade.Forexample,to raiseanyobjectionor to fightfor any amendment to the agreement to admit China to the wro "is to speak utter a nonsense," "head-in-the-sand (Friedman, 2000b). protectionism" see Richardson 3. Fora complementary treatment, S. Mazey (1993).Although andJeremy of on they differwith Streeckand Schmitter their bottom-lineclassification the type of pluralism, they do indeed agree that it is a pluralistic, group-dominated process.For a

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4. 5. 6. 7.

more recent and more complex but consonant treatment of the same, see Richardson (1996). Keller and Pauly's (1997) is an enlightening treatment of the continuing role of the nation-state in the "pluralistic"process of regulating market behavior in what appear superficially to be global markets. Sachs (2000): High tech innovation = ten patents or more per million population. Adopters = high-tech exports of at least 2 percent of GDP. See also pp. 102-121 for a wealth of illustrations of what Kostof calls "keeping apart." Kostof, S., op cit., p. 124: "The fundamental aim of the public place is to ensconce community and to arbitrate social conflict."

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Biographical Note

THEODORE J. LowI has been the John L. Senior Professor of American Institutions at Cornell University since 1972, having received his doctorate at Yale in 1961. A member of the American Academy of Arts and Sciences, he has received honorary degrees from Oakland University and from the State University of New York at Stony Brook as well as the Doctorat honoris causa from the Fondation Nationale des Sciences Politiques of the University of Paris. ADDRESS: Department of Government, Cornell University, 105 McGraw Hall, Ithaca, NY 14853, USA. [e-mail: TJL7@cornell.edu] A shorterversionof this articlewasdeliveredas the author'spresidential Acknowledgement. addressat the IPSA QuebecCity,1 August2000. Congress,